Blockchain Trilemma – The Village’s Impossible Trinity

Blockchain Scalability Trilemma - In the Village Analogy post, we ran through a scenario where the people of the village got frustrated with the corrupt man who kept track of their trades. The villagers eventually got rid of him and moved to a system where they used multiple diaries (ledgers) to keep track of the trades. This enabled them to:

Prevent A Middle-Man From Holding All The Power (Decentralization)​

​​​​​Detect incorrect entries & fraud (Security)

The Village Began To Grow - A Scalability Crisis

However, as the village began to grow, they found it difficult to keep up with the system.

Maintaining the Security of the ledger was a tedious and time-consuming task. It was essential that they cross-check & validate the ledgers properly. Any shortcuts would lead to security-vulnerabilities. Eventually, the village grew into a city, and they simply could not keep up with the task of maintaining the ledger anymore.

Essentially, the village wasn’t able to take their system and Scaleit in preparation for the growth of the city.

In order to scale, the villagers had to alter their solution. They were wary of having a single middle-man due to their past experience with Mr.Ledger. So they appointed a group of individuals to maintain the ledger and keep a check on each other.

The Ultimate Sacrifice

They moved from having a “Middle Man” to having “Middle Men”. Sure – it wasn’t as bad as having a single man in control. But they had still sacrificed their decentralization. They now had:

Ability to detect incorrect entries (Security)

Ability to cater to larger and larger cities (Scalability)

They had come to accept the fact that a sacrifice must be made. They were stuck in a Trilemma. They cannot have all three of the following:

Security

Scalability

Decentralization

These three factors are the essence of the blockchain Trilemma.

Vitalik Buterin calls it the “Scalability trilemma”. Perhaps because blockchains inherently started off with the following: Security, Decentralization

The question then became:“In order to add scalability to my blockchain – what should I sacrifice? Should I sacrifice Decentralization? Or should I sacrifice Security?”

Food for thought: Wouldn’t that then make it a dilemma? Hmm...(Note: A dilemma is when you have to make a choice between two options. A Trilemma is when you have to make a choice between three options)

Conclusion​

As things stand, blockchain solutions are struggling the find the right balance balance to the trilemma. Vitalik Buterin proposes Sharding to theoretically break the trilemma. I explain Sharding (using another analogy) in a previous post. It’s an ingenious solution – but still has some form of sacrifice.

Other blockchain solutions that have high scalability have done so by sacrificing decentralization. EOS is a notable example that uses Delegated Proof Of Stake. This is essentially much like appointing (delegating) a group of individuals to manage the ledger – much like our village analogy.

Finally, other solutions like Radix, HashGraph and IOTA are not blockchains. They do not have the architectural limitations that blockchains do.